Hollande Jobs Pledge Turning Into Achilles Heel as Claims Rise

By Helene Fouquet -
Feb 26, 2013

French President Francois Hollande’s
promise to create jobs by the end of the year is turning into
his Achilles heel.

Jobless claims rose last month to a 15-year high at 3.17
million, the labor ministry said yesterday. The increase brings
such claims close to the country’s historic peak in January 1997
-- when they stood at 3.21 million -- with no signs they’ll fall
any time soon.

While the Socialist president is falling behind on nearly
every economic pledge he’s made for 2013 -- from growth to
shrinking the budget deficit -- nothing is heaping more
criticism on him, especially from his own supporters, than his
inability to spur job creation as he promised.

“Hollande’s ministers have drummed up his jobs promise over
and over again,” said Mathieu Plane, an economist at research
institute OFCE. “It would have been better to have said that
2013 will be a year of sacrifices, with no expectations for the
labor market. But they’ve painted themselves into a corner.”

Unions plan a nationwide demonstration on March 5 to protest
job cuts and the government’s inability to address them, Bernard Thibault, the head of the Confederation Generale du Travail, or
CGT, one of the country’s biggest unions, said on France Info
radio yesterday.

“A credible reversal in the labor market in 2013 will need
other policy options,” Thibault said. “The question is no
longer whether unemployment will shrink this year, but how high
it’ll be.”

Soaring Unemployment

Since Hollande’s May election, companies from PSA Peugeot
Citroen (UG) and Air France (AF) to Sanofi SA have announced thousands of
job cuts. The president’s own state-backed “Jobs for the
Future” youth-employment program has created only 8,000 posts
so far, against the 100,000 planned for the year.

France’s unemployment rate stands at 10.3 percent, the
highest in 13 years. Youth employment is almost double the
national rate.

For OFCE’s Plane, the youth-jobs program is a measure that
at best can “limit the pain.”

“There should be a minimum of 1.5 percent economic growth
to reverse the unemployment trend and we’re very far from
that,” he said.

The European Commission forecast last week that the French
economy will expand 0.1 percent this year, far short of the
government’s 0.8 percent goal. The Commission said it expect
France’s unemployment to rise to 10.7 percent.

Hope Yet

Hollande will also fail to keep his pledge to cap the budget
deficit at 3 percent of gross domestic product, according to the
EU commission, which estimates it’ll be closer to 3.7 percent.
France plans to revise its targets between March and April.

To be sure, Hollande and his ministers continue to hold out
the hope that they may be able to reverse the joblessness trend.

“I’ve asked the government to take all measures to keep our
pledge,” he said on Feb. 23. “If there is no goal, there’s no
will and I will not give up.”

Labor Minister Michel Sapin said yesterday that “even with
growth weaker than what we hoped for, our jobs policies will
enable us to reverse the trend.” Industry Minister Arnaud Montebourg said the European Central Bank should aggressively
work on weakening the euro to help rekindle the region’s stalled
economy by aiding exporters.

With growth falling short of expectations and the deficit
set to be larger than predicted, Hollande is planning spending
cuts and an increase in taxes next year.

More Taxes

The plan drew fire from his supporters. The head of
Socialist Party called for a “halt” on more taxes. For 2013,
the government added 20 billion euros ($26 billion) in
additional taxes on companies and individuals and 10 billion
euros in spending cuts.

“We must not add more taxes,” Harlem Desir told RTL radio
on Feb. 25. “There are spending cuts to be made, efforts to
make across all administrations.”

The opposition party, UMP, is also attacking Hollande,
saying unemployment has risen at double the clip under Hollande
compared with his predecessor Nicolas Sarkozy.

From June, the first month after Hollande took office, to
December, jobless claims increased 6 percent. In the final seven
months of Sarkozy’s tenure, jobless claims added 3 percent, as
most companies froze job cuts before the presidential vote.

When Sarkozy started his mandate in May 2007, jobless
claims shrank 5 percent in the first seven months. He promised a
5 percent unemployment rate for the end of his mandate. At the
height of the financial crisis, from Oct. 2008 to April 2009,
jobless claims rose 18 percent. Over Sarkozy’s term, they
increased by 807,000, or 38 percent.

Social Turmoil

As jobless claims increase and long-term unemployment
rises, worker protests are multiplying. The 1,173 workers of
Goodyear Tire & Rubber Co. (GT) whose jobs are at risk, demonstrated
with their spouses and children in their town of Amiens, in
northern France, yesterday. The U.S.’s largest tire-maker plans
to close the plant.

Earlier this month, a man immolated himself in front of a
state employment office in the western town of Nantes. The
number of workers getting minimum welfare payment, known as RSA,
increased by more than 13 percent last year.

Hollande, who made the promise to reverse the labor market
trend this year during his New Year’s televised address, plans a
new TV appearance in the weeks to come, his office said. He may
seek to revise his pledge as France’s economy proves him wrong.

“Even if the jobs objective is rendered more difficult by
worsening economic conditions, all will be done to meet it,”
Aquilino Morelle, Hollande’s political adviser, told Agence
France-Presse yesterday, adding that there may be a
“revision.”